Self-employment tax applies to a general partner’s distributive share of partnership income; a limited partner is not subject to self-employment tax. The IRS ruled that a taxpayer who held franchises in restaurants in a limited liability company (LLC) could not be treated as a limited partner. The terms of the franchise agreements required him to “devote full time and best efforts” and he directed the operations of the restaurants.
NEW blog post today: Is it Time to Revisit Your Estate Plan?
